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WALL Street may be starting to take a harder look at specialist electric vehicle-maker Tesla as well-capitalised rivals start to eye their turf.

Morgan Stanley chief auto industry analyst Adam Jonas, a long-time advocate of Tesla stock, has lifted his projection of the company’s cash burn rate and scrubbed his buy rating on their stock as a result.

Mr Jonas expects much larger and more well capitalised competitors to unveil strategies that directly address sustainable transport and mobility.

These are likely to include traditional car-makers and rival technology companies Google and Apple that are both ramping up their efforts on autonomous cars.

He predicts Tesla’s losses will continue through next year and that the company will consume $US3.1 billion ($A4.2 billion) in cash this year, up from an earlier estimate of $US2.3 billion ($A3.1 billion).

Tesla shares dropped as much as 3.8 percent at the start of this week after having risen 52 per cent this year prior to that. The shares closed at $US315.88 ($A426.88) in New York on Monday, down $US8.93 ($A12.06) and off 2.75 per cent.

Tesla reportedly spent $US622.4 million ($A853.1 million) in cash during the first quarter, just on half the amount raised in equity and debt offerings in March.

The company has said it expects to triple capital expenditures in the second quarter, boosting first-half spending to more than $US2 billion ($A2.7 billion) before manufacture of the Model 3 commences.

It has been reported that Tesla may need to raise still more capital to enable a 2017 launch of the cheaper, mainstream Model 3 and to fund other investments that range from batteries, burrowing underground to avoid traffic and travelling to Mars.

“The balance sheet is already stretched and Tesla’s shares could be significantly diluted if stock is issued instead of debt,” says Bloomberg analyst Kevin Tynan.

By Daniel Cotterill

Tesla 3

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